SAGE Announces Positive Results for Zuranolone; Shares Plunge 19.3%

Biopharmaceutical company Sage Therapeutics, Inc. (SAGE) and Biogen Inc. (BIIB), a pioneer in neuroscience, together announced positive results for the Zuranolone drug, which is being evaluated for the treatment of Major Depressive Disorder (MDD). However, Shares of SAGE plunged 19.3% to close at $58.80 on June 15, as the findings of the WATERFALL study fell short of investors’ expectations.

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Sage is a clinical-stage biopharmaceutical company engaged in the development and commercialization of novel medicines to treat life-altering central nervous system disorders. (See Sage Therapeutics stock analysis on TipRanks)

The WATERFALL Study was a pivotal, Phase 3, double-blind, randomized, placebo-controlled study evaluating the efficacy and safety of Zuranolone 50 mg in adults 18 to 64 years with MDD.

Zuranolone is a two-week, once-daily, oral drug under investigation for the treatment of MDD. The treatment of patients with the drug significantly improved the HAMD-17 readings, a method for measuring depression severity. However, the improvement was just 1.7 points less than the results from the placebo group.

The drug was generally well-tolerated in the WATERFALL Study and demonstrated a safety profile consistent with previous clinical studies.

Efficacy was balanced across patient subgroups, and Day 15 responders retained 86.1% of their improvement at Day 42.

Barry Greene, the company’s CEO said, “We dared to imagine a different future for the treatment of MDD where patients have the potential to experience a rapid response that is well-tolerated and that may enable them to stay better with long periods free from depression symptoms, and free from daily chronic treatments and related side effects.”

Following the announcement, Oppenheimer analyst Jay Olson reiterated a Buy rating on the stock with a price target of $100, implying 70.1% upside potential to current levels.

Olson said, “We believe these results support the rapid-acting profile of Zuranolone as a differentiated approach to episodic MDD, which remains a large unmet need… We suspect market reaction reflects misconceptions about relative importance of rapid onset vs. durability, providing an attractive entry point for SAGE.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 8 Buys versus 9 Holds. The SAGE average analyst price target of $99.92 implies 70% upside potential to current levels. Shares have increased 53.8% over the past year.